<PAGE> 1
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Information Statement
[X] Definitive Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
FRESENIUS MEDICAL CARE HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
FRESENIUS MEDICAL CARE HOLDINGS, INC.
------------------------
1998 ANNUAL MEETING OF SHAREHOLDERS
JUNE 3, 1998
To the Shareholders:
Notice is hereby given that the 1998 Annual Meeting of Shareholders of
Fresenius Medical Care Holdings, Inc., a New York corporation (the "Company"),
will be held at the Royal Sonesta Hotel, 5 Cambridge Parkway, Cambridge,
Massachusetts on Wednesday, June 3, 1998 at 2:00 p.m. for the following
purposes:
1. To elect three directors of the Company, one of whom will be a Class
II director and two of whom will be Class III directors; and
2. To transact any and all other business that may properly come before
the meeting.
All shareholders of record at the close of business on April 24, 1998 are
entitled to notice of and to vote at this meeting.
The Company's audited financial statements, together with certain other
information concerning the Company, are included in the Company's Annual Report
on Form 10-K which is enclosed herewith.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
By order of the Board of Directors,
WILLIAM F. GRIECO
General Counsel, Vice President and
Secretary
Lexington, Massachusetts
April 30, 1998
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 1
PROPOSAL 1 -- ELECTION OF DIRECTORS......................... 2
EXECUTIVE COMPENSATION...................................... 5
REPORT OF THE BOARD OF DIRECTORS REGARDING EXECUTIVE COM-
PENSATION................................................. 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MAN-
AGEMENT................................................... 11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 13
INDEPENDENT PUBLIC ACCOUNTANTS.............................. 14
OTHER MATTERS............................................... 14
</TABLE>
<PAGE> 4
INFORMATION STATEMENT
INTRODUCTION
This Information Statement, dated April 30, 1998, is furnished in
connection with the 1998 Annual Meeting of Shareholders of Fresenius Medical
Care Holdings, Inc. (the "Company") to be held at the Royal Sonesta Hotel, 5
Cambridge Parkway, Cambridge, Massachusetts on Wednesday, June 3, 1998 at 2:00
p.m., and any adjournments thereof (the "Annual Meeting"), for the purposes set
forth in the notice of such meeting.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
It is expected that this Information Statement will be mailed to
shareholders on or about April 30, 1998.
The complete mailing address of the Company's principal executive office is
Two Ledgemont Center, 95 Hayden Avenue, Lexington, Massachusetts 02173
(telephone (781) 402-9000).
Only shareholders of record at the close of business on April 24, 1998 are
entitled to vote at the Annual Meeting and any adjournments thereof. At that
record date, the following voting shares of the Company were outstanding:
<TABLE>
<CAPTION>
SHARES VOTES PER
CLASS OUTSTANDING SHARE
----- ----------- ---------
<S> <C> <C>
6% Preferred Stock................................. 36,460 160
Class A Preferred Stock............................ 16,176 16
Class B Preferred Stock............................ 21,483 16
Class D Special Dividend Preferred Stock........... 89,062,316 0.1
Common Stock....................................... 90,000,000 1
</TABLE>
Holders of all shares will vote together as a single class on all matters
expected to be acted on at the Annual Meeting.
Appraisal rights are not available to shareholders with respect to any
matter expected to be acted upon at the Annual Meeting.
THE MERGER
All of the Company's Common Stock (the "Common Stock") is currently held by
Fresenius Medical Care AG ("Fresenius Medical Care"). On September 30, 1996, the
Company completed a Merger (the "Merger") described in detail in the Joint Proxy
Statement-Prospectus of Fresenius Medical Care, the Company and Fresenius USA,
Inc. ("Fresenius USA") dated August 2, 1996. The Merger was accomplished
pursuant to the Agreement and Plan of Reorganization dated as of February 4,
1996, as amended, among the Company, Fresenius Aktiengesellschaft ("Fresenius
AG") and Fresenius USA. Shareholders of the Company approved the Merger on
September 16, 1996. On September 27, 1996, pursuant to the Distribution
Agreement, dated February 4, 1996, the Company distributed to its common
shareholders (the "Distribution") 100% of the capital stock of Grace Holding,
Inc., a Delaware corporation and formerly a wholly-owned subsidiary of the
Company ("New Grace"), which holds all of the assets and liabilities formerly
held by the Company, other than those of its wholly-owned subsidiary, National
Medical Care, Inc. ("NMC"). Immediately following the Distribution, (i) the
Company was recapitalized so that each holder of shares of the Company's Common
Stock received one share of Class D Special Dividend Preferred Stock ("Class D
Preferred Stock") for each share of the Company's Common Stock held of record as
of the close of business on September 27, 1996 and (ii) the Company's name was
changed to Fresenius National Medical Care Holdings, Inc. Thereafter, WRG Merger
Sub Inc., a New York corporation and a wholly-owned subsidiary of Fresenius
Medical Care, merged with and into the Company with the Company as the surviving
corporation. As a result of the Merger, the Company became a subsidiary of
Fresenius Medical Care. Following the Merger, Fresenius Medical Care contributed
all of the outstanding common stock of Fresenius USA
1
<PAGE> 5
("Fresenius USA Common Stock") to the Company. In June 1997, the Company's name
was changed to Fresenius Medical Care Holdings, Inc.
The Annual Report on Form 10-K of the Company, including the Company's
audited consolidated financial statements for the year ended December 31, 1997,
is being mailed to the Company's shareholders with this Information Statement.
The Annual Report on Form 10-K is not to be regarded as proxy soliciting
material or as a communication by means of which a solicitation of proxies is to
be made.
At the date hereof, management of the Company has no knowledge of any
business other than that described in the notice for the Annual Meeting which
will be presented for consideration at such Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
On June 12, 1997 Article Fifth of the Company's Certificate of
Incorporation was amended to eliminate the classification of the Board of
Directors into three classes with staggered three-year terms. The amendment to
Article Fifth instituted annual elections for directors as the terms for which
their respective classes have been elected expire. For instance, the terms of
the Class II director and Class III directors expire at the Annual Meeting;
accordingly the shareholders will vote to elect such directors for new one-year.
At the 1999 annual meeting, the terms of the Class I and all other directors
will expire, shareholders will vote on one-year terms for all directors, and
directors will no longer be referred to by class. Until the termination of Board
classification is fully effective, any person elected to fill a Board vacancy in
the Class I directors will be elected to serve until the next annual meeting
and, at that time, a candidate will be elected to serve for the remaining term
of the Class I director.
As discussed above, it is anticipated that one Class II director and two
Class III directors will each be elected for a one-year term. The name and
biography of the nominees are set forth below under "Nominee." The names and
biographies of the continuing directors are set forth below under "Continuing
Directors."
Under the laws of the State of New York (in which the Company is
incorporated), the election of directors requires the affirmative vote of a
plurality of the shares represented at the Annual Meeting. The holders of all
classes of the Company's Preferred Stock and the Common Stock will vote as a
single class on Proposal 1. Fresenius Medical Care intends to vote in favor of
this proposal. Accordingly, Proposal 1 will be approved even if all other shares
currently outstanding that are not held by Fresenius Medical Care vote against
the proposal. Abstentions will have no effect as to the outcome of Proposal 1.
NOMINEES
At the Annual Meeting it is intended that one Class II and two Class III
directors be elected to hold office until the 1999 annual meeting and until
their successors shall have been duly elected and qualified. The nominees listed
below have been designated as such by the Board of Directors, and it is
anticipated that the nominees will be candidates when the election is held.
However, if for any reason a nominee is not a candidate at that time, a
substitute nominee will be designated by the Company. The nominees are currently
directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
CLASS II DIRECTOR
Ben J. Lipps....................... 57 Director, President and Chief Executive
Officer
CLASS III DIRECTORS
Hans-Ulrich Sutter................. 49 Director
Udo Werle.......................... 53 Director
</TABLE>
Ben J. Lipps has been President, Chief Executive Officer and a director of
the Company since 1996. He has served as President, Chief Executive Officer,
Chief Operating Officer and a director of Fresenius USA since October 1989, and
in various capacities with Fresenius USA's predecessor since 1985. Mr. Lipps
joined
2
<PAGE> 6
Dow Chemical Company in 1966 and led the research team that developed the first
hollow fiber dialyzer between 1967 and 1969. Prior to joining Fresenius USA's
predecessor, Mr. Lipps was a Vice President of Research and Development for
Cordis Dow Corporation.
Hans-Ulrich Sutter has been a Director of the Company since April 1, 1998.
Mr. Sutter was appointed as a Member of the Management Board of Fresenius
Medical Care effective July 1, 1997 and has served as Chief Financial Officer of
Fresenius Medical Care since July 1997. Mr. Sutter was previously a member of
the management committee of the German subsidiary of Proctor & Gamble Company
and had served that company in different capacities for more than 24 years. In
his last position with Proctor & Gamble Mr. Sutter was responsible for the
Finance and Controlling function of its European tissue business.
Udo Werle has been Chairman of the Board of Directors since January 1998, a
director of the Company since 1996 and has served as Treasurer of the Company
until August 1997. Mr. Werle has served as a member of the Management Board and
Chief Financial Officer of Fresenius Medical Care since 1996 and was appointed
Chairman of the Management Board effective January 1, 1998. Mr. Werle has also
served as a Chief Financial Officer and Labor Relations Director of Fresenius AG
since January 1994. Mr. Werle was previously a member of the Management Board of
ABB Kraftwerke AG, Mannheim. In his last position as President of ABB Power
Ventures Ltd., Zurich/Mannheim, he was responsible for all cooperation and joint
ventures of the Power Generation segment. Mr. Werle joined ABB Power Ventures
Ltd. in 1970.
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
CLASS I DIRECTORS
Geoffrey W. Swett.................. 49 Director and Vice President
William F. Grieco.................. 44 Director, General Counsel, Vice President and
Secretary
</TABLE>
CLASS I DIRECTORS -- TERM EXPIRING IN 1999
Geoffrey S. Swett has been a director and Vice President of the Company
since 1996. Mr. Swett has spent over 16 years with NMC and is currently
President of the Dialysis Services Division ("DSD"). Prior to his current
position, he was a Senior Vice President in DSD. Before joining NMC, Mr. Swett
worked in various administration positions within various hospitals. Mr. Swett
received his undergraduate degree from Harvard University.
William F. Grieco has been a director, General Counsel and Secretary of the
Company since 1996 and has served as a Vice President of the Company since April
1, 1998. Mr. Grieco joined NMC in October 1995 as Senior Vice President and
General Counsel. Mr. Grieco is also a director of PHC, Inc., a provider of
inpatient and outpatient alcohol, drug and psychiatric treatment. Prior to
October 1995, Mr. Grieco was a partner in the law firm of Choate, Hall &
Stewart, where he maintained a diversified health care practice. Mr. Grieco
received his undergraduate degree and his law degree from Boston College, and a
graduate degree in health policy and management from Harvard University.
THE BOARD OF DIRECTORS
The Company's Board of Directors is responsible for the affairs of the
Company.
During 1997, the Board held one meeting but acted by unanimous written
consent of its members on seven occasions. Messrs. Lipps, Werle, Grieco and
Swett were elected to the Board in connection with the closing of the Merger.
Mr. Sutter was elected to the Board as of April 1, 1998. Mr. Lipps was
re-elected to the Board at the 1997 Annual Meeting of Shareholders. The Company
has no standing Compensation Committee, Audit Committee or Nominating Committee.
Dr. Krick resigned as Chairman of the Board effective December 31, 1997.
3
<PAGE> 7
EXECUTIVE OFFICERS
The current executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Ben J. Lipps......................... 57 President, Chief Executive Officer and
Director
Geoffrey W. Swett.................... 49 Vice President and Director
William F. Grieco.................... 44 General Counsel, Vice President, Secretary and
Director
Jerry A. Schneider................... 50 Vice President, Chief Financial Officer and
Treasurer
J. Michael Lazarus, M.D.............. 60 Senior Vice President of Clinical Quality and
Medical Director
</TABLE>
Each officer was elected to hold office until he resigns or is removed by
the Board of Directors.
For a biography of Messrs. Lipps, Werle and Sutter, see "Nominees" above.
For biographies of Mr. Swett and Mr. Grieco, see "Continuing Directors" above.
J. Michael Lazarus, M.D. has been the Senior Vice President of Clinical
Quality and Medical Director of the Company since 1996. Prior to joining the
Company Dr. Lazarus maintained a private practice in internal medicine and
nephrology from 1963 to 1996 and was a senior physician at Brigham and Women's
Hospital in Boston Massachusetts from 1992 to 1996. Dr. Lazarus is board
certified in internal medicine and nephrology and is currently an Associate
Professor of Medicine at Harvard Medical School. Dr. Lazarus received his
undergraduate degree from the University of North Carolina at Chapel Hill and is
a 1963 graduate of Tulane University School of Medicine.
Mr. Schneider has been the Vice President, Chief Financial Officer and
Treasurer of the Company since August 18, 1997. From January 1995 to July 1997
Mr. Schneider was Chief Financial Officer of Grancare, Inc., a provider of long
term nursing, rehabilitation and pharmacy services. Prior to his position with
Grancare, Inc., Mr. Schneider was the President of J. & K. Alan Company, Ltd., a
London-based provider of investment and management services, from 1991 to 1994.
Mr. Schneider received his undergraduate degree from the University of
California at Berkeley and his J.D. degree from Loyola University of Los
Angeles.
4
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The Company is sometimes referred to as "Grace" below when discussing
compensation plans and policies in existence prior to the Merger, in order to
distinguish such plans and policies from those currently in effect. The
following table summarizes the total compensation paid or to be paid by the
Company and its subsidiaries for services rendered during 1995, 1996 and 1997 to
Ben Lipps, Chief Executive Officer of the Company, Geoffrey W. Swett, William F.
Grieco, J. Michael Lazarus, M.D. and Jerry A. Schneider, the four other most
highly compensated executive officers of the Company or its subsidiaries (the
"Specified Executives"):
Summary Compensation Table
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ----------------------
-------------------------------------------- AWARDS PAYOUTS
OTHER SECURITIES LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION UNDERLYING PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) OPTIONS(#) ($)(1) ($)
------------------ ---- --------- -------- --------------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ben J. Lipps(3) 1997 600,000 0 0 0 33,996(10)
President, Chief Executive Officer 1996 225,000 200,000 34,373(10)
and Director 1995 225,000 200,000 450,000(4) 34,195(10)
Geoffrey W. Swett 1997 294,231 0 1,800(8) 229,766 5,056(2)
Vice President and 1996 192,480 268,305(6) 336,420 4,056(2)
Director 1995 157,134 108,577 174,119 2,124(2)
William F. Grieco 1997 278,942 0 1,800(8) 5,056(2)
General Counsel, Vice 1996 225,000 260,000(6) 1,748(2)
President, Secretary and Director 1995 32,885 25,000 176(2)
J. Michael Lazarus, M.D. 1997 430,769 0 2,500(8) 5,056(2)
Senior Vice President of 1996 205,384 235,000(6) 792(2)
Clinical Quality and Medical
Director
Jerry A. Schneider 1997 112,500 75,000(7) 33,303(9) 126,801(5) 352(2)
Vice President, Chief Financial
Officer and Treasurer
</TABLE>
- ---------------
(1) The amounts in this column for 1997 and 1996 represent awards earned under
Grace's Long-Term Incentive Program ("LTIP") for respectfully, the
1995-1998 Performance Period and the 1993-1995 Performance Period. The
amounts in this column for 1995 represent the third and final installment
of awards earned under the LTIP for the 1990-1992.
(2) Represents the value of the group term life insurance premiums paid by the
Company and the Company's contributions to the respective officer's 401(k)
plan. Mr. Grieco was not eligible to participate in the Company's 401(k)
plan in 1995. Mr. Schneider was not eligible to participate in the
Company's 401(k) plan in 1997. Dr. Lazarus was not eligible to participate
in the Company's 401(k) plan in 1995 and 1996.
(3) During 1995, 1996 and 1997, Mr. Lipps' compensation was paid by Fresenius
USA and by Seratronics, Inc. ("Seratronics"), which was managed by
Fresenius USA. In each year listed above, Seratronics paid $66,500 of
salary and $0 of bonus to Mr. Lipps.
(4) Represents options granted to Mr. Lipps by Fresenius USA. In 1996, Mr.
Lipps exercised such options and resold the shares, as well as other shares
of Fresenius USA Common Stock, to Fresenius USA. See "Certain Relationships
and Related Transactions -- Relationships and Transactions with Directors
and Executive Officers -- Securities Repurchases."
(5) Represents 125,001 options with respect to American Depository Shares
("ADSs") representing Fresenius Medical Care Preference Shares, which were
granted to Mr. Schneider under the Fresenius Medical Care 1996 Stock
Incentive Plan (the "1996 FMC Plan") and options with respect to 1,800
Fresenius Medical Care Preference Shares, which were granted to Mr.
Schneider as 1997 bonus compensation under the Fresenius Medical Care 1998
Stock Incentive Plan (the "1998 FMC Plan").
5
<PAGE> 9
(6) Constitutes payments made in accordance with the Retention Bonus Program
adopted by the Grace Board of Directors on February 4, 1996. See
"-- Retention Bonus Program."
(7) Represents a $75,000 signing bonus paid upon Mr. Schneider's commencement
of employment in August 1997. See "Executive Compensation -- Employment
Agreements" for additional information concerning 1997 bonus awards Mr.
Schneider.
(8) Represents the number of options to purchase Fresenius Medical Care
Preference Shares which were granted as a bonus under the 1998 FMC Plan.
(9) Represents (a) $33,284 attributable to the value of relocation expenses
paid by the Company in 1997 in connection with Mr. Schneider's relocation
to Massachusetts and (b) interest in excess of 120% of the applicable
federal long-term rate on compensation payable during 1997 but deferred at
Mr. Schneider's election pursuant to the Company's deferred compensation
plan.
(10) These amounts include the value of (a) the Company's contribution to Mr.
Lipps' 401(k) plan, (b) the Company's payment of group term life insurance
premiums and (c) the Company's payment of premiums attributable to a
supplemental life insurance policy and a supplemental disability insurance
policy in the amount of $30,128.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The Company does not currently have a stock option plan. However, executive
officers and certain employees of the Company and its subsidiaries are eligible
to participate in the 1996 FMC Plan and the 1998 FMC Stock Plan. Options were
granted in December 1997 under the 1996 FMC Plan to certain executive officers
and employees of the Company, including Mr. Schneider. Options were granted in
April 1998 under the 1998 FMC Plan to Messrs., Swett, Grieco and Schneider and
Dr. Lazarus. See "Certain Relationships and Related
Transactions -- Relationships and Transactions with Executive Officers -- Loans
to Officers under the Stock Incentive Plans."
The following table sets forth information concerning stock options granted
in 1997, including the potential realizable value of each grant assuming that
the market value of the Company's Common Stock appreciates from the date of
grant to the expiration of the option at annualized rates of (a) 5% and (b) 10%,
in each case compounded annually over the term of the option. These assumed
rates of appreciation have been specified by the SEC for illustrative purposes
only and are not intended to predict future prices of the Company's Common
Stock, which will depend upon various factors, including market conditions and
the Company's future performance and prospects. The options shown below became
exercisable in three approximately equal annual installments beginning one year
after the date of grant.
<TABLE>
<CAPTION>
1997 GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
OF SHARES OPTIONS PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM
OPTIONS EMPLOYEES PRICE EXPIRATION ------------------------------
NAME GRANTED IN 1997 ($/SHARE) DATE 5% 10%
---- ---------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jerry A. Schneider.......... 125,001(1) 38.5% $18.53 December, 2007 $1,456,689 $3,691,536
</TABLE>
- ---------------
(1) Options granted to Mr. Schneider in 1997 under the 1996 FMC Plan vest over a
three-year period.
PENSION ARRANGEMENTS
Most of the Company's employees who work 900 hours or more per year are
covered by the Fresenius Medical Care North America Retirement Plan (the "FMC
Retirement Plan"), effective as of the first day of the month following their
date of hire. Under this basic retirement plan, pension benefits are based upon
(1) the number of years of the covered employee's credited service (subject to a
maximum of 30), (2) the covered employee's final average earnings for the 60
consecutive months in which his or her compensation on any July 1 was highest
during the last 120 months of continuous participation, and (3) the social
security covered compensation (the average social security tax base for the 35
years prior to the covered employee's 65th birthday).
6
<PAGE> 10
The annual retirement benefit under the FMC Retirement Plan consists of the
sum of (1) 0.85% of the covered employee's final average earnings multiplied by
his or her years of benefit service, and (2) 0.65% of the covered employee's
final average earnings greater than his or her social security covered
compensation base multiplied by his or her years of benefit service.
The following table shows the annual pensions payable under the FMC
Retirement Plan for different levels of compensation and years of credited
service. The amounts shown have been computed on the assumption that the covered
employee retired at age 65 on December 31, 1997, with benefits payable on a
straight life annuity basis.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
--------------------------------------------------------
10 15 20 25 30
YEARS YEARS YEARS YEARS YEARS
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
$ 100,000.......................... $ 12,977 $ 19,465 $ 25,953 $ 32,422 $ 38,930
200,000.......................... 27,977 41,965 55,953 69,942 83,930
300,000.......................... 42,977 64,465 85,953 107,442 128,930
400,000.......................... 57,977 86,965 115,953 144,942 173,930
500,000.......................... 72,977 109,465 145,953 182,442 218,930
600,000.......................... 87,977 131,965 175,953 219,942 263,930
700,000.......................... 102,977 154,465 205,953 257,442 308,930
800,000.......................... 117,977 176,965 235,953 294,942 353,930
900,000.......................... 132,977 199,465 265,953 332,442 398,930
1,000,000.......................... 147,977 221,965 295,953 369,942 443,930
1,100,000.......................... 162,977 244,465 325,953 407,442 488,930
1,200,000.......................... 177,977 266,965 355,953 444,942 533,930
1,300,000.......................... 192,977 289,465 385,953 482,442 578,930
1,400,000.......................... 207,977 311,965 415,953 519,942 623,930
1,500,000.......................... 222,977 334,465 445,953 557,442 668,930
</TABLE>
Messrs. Grieco, Swett, Schneider and Dr. Lazarus had 2.2, 17.9, .4 and 1.8
years of credited service, respectively, under the FMC Retirement Plan at
year-end 1997. For the purposes of that plan, the average compensation of the
highest consecutive five years of the last ten years of credited service was
$180,573 for Mr. Swett. No such average compensation can be computed for Mr.
Grieco, Dr. Lazarus, and Mr. Schneider since they have less than five years of
credited service. Mr. Lipps is not presently covered by the FMC Retirement Plan.
DIRECTORS' COMPENSATION AND CONSULTING ARRANGEMENTS
The directors of the Company are not compensated for their services as
such. For information with respect to compensation paid by the Company and its
subsidiaries to Mr. Lipps and Messrs. Grieco and Swett, see the Summary
Compensation Table above. Information with respect to compensation paid by
Fresenius USA to its directors is provided below. Except as disclosed with
respect to compensation by Fresenius USA below, Mr. Werle and Dr. Krick did not
receive compensation from the Company and its subsidiaries in 1997. Except as
described below regarding compensation paid to directors of Fresenius USA, Mr.
Werle and Dr. Krick received all of their 1997 compensation from Fresenius AG,
Fresenius Medical Care, and subsidiaries of Fresenius Medical Care other than
the Company and its subsidiaries.
In 1997 non-employee directors of Fresenius USA received a directors fee.
Dr. Krick and Mr. Werle received a directors fee in the amount of $60,000 and
$40,000, respectively.
EMPLOYMENT AGREEMENTS
Pursuant to an employment agreement between Fresenius USA and Mr. Lipps,
which became effective as of January 1, 1992 and was modified effective January
1, 1997 (the "Modification"), Mr. Lipps was required to devote substantially all
of his business efforts and time to serving as the President of Fresenius USA,
subject to his also serving as the President and Chief Executive Officer of
Seratronics. Mr. Lipps receives from Fresenius USA an annual base salary of
$600,000, and is eligible to participate in the Company's management bonus plan
(the "FMC Bonus Plan") based on the attainment of certain sales and
7
<PAGE> 11
profits targets set annually by management and reviewed by the Company's Board
of Directors. Under the FMC Bonus Plan, Mr. Lipps can earn a bonus equal to
forty percent of his base salary with a maximum bonus of one hundred percent of
his base salary. Fresenius USA and Mr. Lipps agreed that Fresenius USA's
obligations in respect of such salary and bonus are decreased by amounts payable
to Mr. Lipps by Seratronics. Seratronics is wholly-owned by Anderson Group, Inc.
Mr. Francis E. Baker, a member of the Fresenius USA Board until consummation of
the Merger, is the President of Andersen Group, Inc. In connection with the
Merger, Mr. Lipps became President, Assistant Secretary and a director of the
Company, and now performs services for the Company and its other subsidiaries.
Under the terms of his employment agreement, Mr. Lipps is entitled to
reimbursement during 1997 and 1998 only, for (a) expenses incurred in connection
with renting and maintaining a residence in the State of California and (b)
reasonable expense incurred in connection with commuting to and from his
California residence twice each month. Mr. Lipps also was granted stock options
with respect to 120,000 shares of Fresenius USA Common Stock at an exercise
price of $3.125 per share, which were fully vested as of December 31, 1995. Mr.
Lipps' employment agreement is terminable upon 30 days' advance notice by
Fresenius USA, in which event Mr. Lipps is owed one year's base salary payable
over the year following such termination plus $100,000 payable upon such
termination. The agreement may also be terminated by Mr. Lipps upon one year's
notice, as well as by Fresenius USA upon termination for cause and under certain
other circumstances. Upon any such termination, Fresenius USA may require that
Mr. Lipps refrain, for up to two years, from carrying on a business in
competition with Fresenius USA's business, in which event Fresenius USA must pay
an additional annual amount to Mr. Lipps equal to his annual salary (or, if
greater, the aggregate premiums on certain life and disability policies carried
by Mr. Lipps). The foregoing description of Mr. Lipps' employment agreement does
not purport to be complete and is qualified in its entirety by reference to such
agreement, which was filed with the SEC as an exhibit to Fresenius USA's Annual
Report on Form 10-K for the year ended December 31, 1992. A copy of the
Modification is to be filed with the SEC in May 1998 as an exhibit to the
Company's Form 10-Q for the period ended March 31, 1998.
Pursuant to the terms of an employment agreement, between Mr. Schneider and
the Company, which became effective August 18, 1997 and was amended effective
September 18, 1997, Mr. Schneider receives an annual base salary of $325,000 and
is eligible to participate in the FMC Bonus Plan. Upon commencement of his
employment Mr. Schneider received a signing bonus of $75,000. Under the FMC
Bonus Plan, Mr. Schneider can earn, subject to the Company's attainment of
specified financial objectives, a bonus of forty percent of his base salary with
a maximum bonus of one hundred percent of his base salary. For 1997 Mr.
Schneider was entitled to a make a one-time election with regard to the payment
of his incentive compensation by electing: (a) to receive either a guaranteed
payment of $100,000 when executive bonus payments were made in 1998 (the
"Guaranteed Payment"); or (b) to fully participate in the FMC Bonus Plan,
without pro-ration for 1997, and to receive such payment in 1998 based on actual
funding of the FMC Bonus Plan; or (c) to have NMC purchase his former residence
for its appraised value not to exceed $75,000 over his adjusted cost basis. Mr.
Schneider has elected the Guaranteed Payment option but has not yet received
payment of this bonus award from the Company. In addition, Mr. Schneider is
entitled to reimbursement for: (a) the difference between the sales price of his
former personal residence and its adjusted cost basis in such property and (b)
certain costs incurred in connection with his relocation to Massachusetts. Mr.
Schneider was granted options under the 1996 FMC Plan to purchase 125,001 ADS's
representing Fresenius Medical Care Preference Shares at $18.53 per share,
vesting over three years. The term of Mr. Schneider's employment agreement is
two years commencing August 18, 1997 and may be terminated by the Company for
cause and under certain other circumstances. In the event Mr. Schneider's
employment agreement is terminated for any reason other than cause, or if Mr.
Schneider terminates his employment agreement because of a breach of its terms
by the Company, Mr. Schneider is entitled to his base salary and a continuation
of his benefits for a period of two years from the date of such termination. The
foregoing description of Mr. Schneider's employment agreement does not purport
to be complete and is qualified in its entirety by referenced to such agreement,
which is to be filed with the SEC in May 1998 as an exhibit to the Company's
Form 10-Q for the period ended March 31,1998. See " Certain Relationships and
Related Transactions - Loans to Officers"
8
<PAGE> 12
RETENTION BONUS PROGRAM
On February 4, 1996, the Grace Board of Directors adopted a Retention Bonus
Program to encourage certain key employees to stay with the Company through the
closing date of a possible spinoff, merger or sale. There were guaranteed award
and contingent award components to the Retention Bonus Program. For executive
officers, guaranteed awards were set at 75% to 150% of their respective annual
salaries and were subject to the executive officer remaining with the Company
through the above-described closing date. Contingent awards were based on the
achievement of certain cash flow targets and the allocation of the contingent
award pool was based on the relative contribution of the various businesses and
departments to the consolidated results. For 1996, the cash bonus awards paid to
Messrs. Swett and Grieco and Dr. Lazarus consisted solely of payments under the
Retention Bonus Program. No further amounts are due or payable pursuant to the
Retention Bonus Program.
RESIGNATIONS OF EXECUTIVE OFFICERS
Mr. Werle resigned as Treasurer of the Company effective August 21, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Lipps and Werle are each directors of the Company and, as such,
participate in the deliberations of the Company's Board of Directors concerning
executive officer compensation. Each of such individuals is also a member of the
Management Board of Fresenius Medical Care, and Mr. Werle is a member of the
Management Board of Fresenius AG. For information regarding certain transactions
between the Company or its subsidiaries on the one hand and Fresenius Medical
Care or Fresenius AG on the other, see "Certain Relationships and Related
Transactions."
REPORT OF THE BOARD OF DIRECTORS
REGARDING EXECUTIVE COMPENSATION
OVERALL PHILOSOPHY
The Company's overall executive compensation philosophy is based on the
premise that compensation should be aligned with and support the Company's
business strategy and long-term goals, and that it should give employees
incentives to enhance stockholder value. The key elements of executive
compensation are base salary, annual cash incentive (bonus) awards and/or annual
incentive bonus stock options for non-voting preference shares of Fresenius
Medical Care, the Company's parent corporation. Base salary is intended
primarily to reward past performance; annual cash bonus and stock option
incentives are intended primarily to reward achievement of specific performance
goals during the year; and stock options are designed primarily to foster an
identity of interest between the employee and Fresenius Medical Care.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Lipps' compensation currently consists of a base salary and cash
incentive (bonus) awards. Mr. Lipps' base salary was set under the terms of his
employment agreement with Fresenius USA, Inc., which became a wholly-owned
subsidiary of the Company in connection with the Merger. Mr. Lipps' base
compensation under that agreement, which was increased from $225,000 to $600,000
effective January 1, 1997 was based on competitive pay practices, his individual
experience and breadth of knowledge and other subjective factors. Future
increases to his base salary are expected to be determined primarily on the
basis of his individual performance and contribution and involve the application
of both quantifiable and subjective criteria. Mr. Lipps does not presently hold
options under either the 1996 FMC Plan or the 1998 FMC Plan but is eligible to
receive awards under the 1998 FMC Plan. Mr. Lipps abstained from all Board
discussions and actions relating to his compensation.
COMPENSATION OF OTHER EXECUTIVE OFFICERS
Mr. Lipps makes recommendations to the Board of Directors concerning the
base salaries, annual cash and/or stock option incentive awards and stock option
awards for the executive officers of the Company other
9
<PAGE> 13
than himself. Annual cash and/or stock option incentive awards are granted based
on the achievement of financial targets and individual performance. The number
of stock options to be granted to any particular executive is based primarily on
that person's perceived ability to help the Company achieve its goals as well as
that person's base salary and potential bonus.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code prohibits the Company from
deducting annual compensation in excess of $1 million paid to executive officers
named in the Summary Compensation Table of the Information Statement, unless
such compensation is performance-based and satisfies certain other conditions.
The Company intends to the extent practicable to qualify all payments of
compensation under Section 162(m).
William F. Grieco
Ben J. Lipps
Hans-Ulrich Sutter
Geoffrey W. Swett
Udo Werle
10
<PAGE> 14
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 24, 1998 certain information
with respect to each person who is known by the Company to own beneficially more
than 5% of each class of the voting securities of the Company, each director of
the Company, each nominee for director of the Company, certain executive
officers and all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNERS OWNED OF CLASS
------------------------------------- ------------ ----------
<S> <C> <C>
COMMON STOCK:
Fresenius Medical Care AG(1)
Borkenberg 14
61440 Oberursel
Germany................................................... 90,000,000 100.0%
All directors and executive officers as a group........... 0 0
6% PREFERRED STOCK:
Grace Institute(2)
c/o Marine Midland Bank
P.O. Box 1329
Buffalo, New York 14240................................... 2,949 8.1%
Various former executive officers and others, with respect
to the W.R. Grace & Co. Retirement Plan for Salaried
Employees(3)........................................... 9,648(T)(S) 26.5%
All directors and executive officers as a group........... 0 0
CLASS A PREFERRED STOCK:
Namanco & Co.
P.O. Box 426
Exchange Place Station
69 Montgomery Street
Jersey City, New Jersey 07303............................. 2,803 17.3%
All directors and executive officers as a group........... 0 0
CLASS B PREFERRED STOCK:
Namanco & Co.
P.O. Box 426
Exchange Place Station
69 Montgomery Street
Jersey City, New Jersey 07303............................. 5,143 23.9%
Various former executive officers and others, with respect
to the W.R. Grace & Co. Retirement Plan for Salaried
Employees(3)........................................... 959(T)(S) 4.4%
All directors and executive officers as a group........... 0 0
CLASS D PREFERRED STOCK:
Ben J. Lipps................................................ 100 (4)
All directors and executive officers as a group........... 100 (4)
</TABLE>
- ---------------
(1) Fresenius AG owns 50.3% of the outstanding Fresenius Medical Care Ordinary
Shares and none of the Fresenius Medical Care Preference Shares. The share
capital of Fresenius AG consists of Fresenius AG Ordinary Shares and
non-voting preference shares, nominal value DM 5 per share ("Fresenius AG
Preference Shares"), both of which are issued only in bearer form.
Accordingly, Fresenius AG has no way of determining who its shareholders are
or how many shares any particular shareholder owns. However, under the
German Stock Corporation and Securities Law, holders of voting securities of
a German company listed on a stock exchange within the European Union are
obligated to notify the company of certain levels of holdings.
Fresenius AG has been informed that the Else Kroner-Fresenius-Stiftung (the
"Foundation") owns 55.96% of the Fresenius AG Ordinary Shares. The
Foundation serves to promote medical science,
11
<PAGE> 15
primarily in the fields of research and treatment of illnesses, including
the development of apparatuses and preparations. The Foundation may promote
only those research projects the results of which will be generally
accessible to the public. The Foundation further serves to promote the
education of physicians or of others concerned with the treatment and care
of sick persons, primarily those working in the field of dialysis, as well
as to promote the education of particularly gifted pupils and students. The
administrative board of the Foundation consists of Mr. Hans Kroner
(Chairman), Mr. Hans Goring (Vice Chairman), Frankfurt/Main and Professor
Dr. Volker Lang, Gauting. Until May 1, 1996, Mr. Kroner was a member of the
Supervisory Board of Fresenius AG (the "Fresenius AG Supervisory Board").
Pursuant to the terms of the will of the late Mrs. Else Kroner, under which
the Foundation acquired most of its shares, Mrs. Kroner's executors exercise
voting and dispositive power over the shares held by the Foundation. The
executors under Mrs. Kroner's will are Mr. Kroner, Dr. Alfred Stiefenhofer
and Dr. Karl Schneider. Mr. Kroner's address is Dipl. Volkswirt Hans Kroner,
Postfach 1852, 61288 Bad Homburg v.d.H., Germany. Dr. Stiefenhofer's address
is Norr, Stiefenhofer & Lutz, Brienner Strasse 28, 80333 Munich, Germany.
Dr. Stiefenhofer is Chairman of the Fresenius AG Supervisory Board. Dr.
Schneider's address is Dr. Schneider, Werderstrasse 42, 68165 Mannheim,
Germany. Dr. Schneider is a member of the Fresenius AG Supervisory Board.
Fresenius AG has been informed that AW-Beteiligungs-GmbH ("AW") owns 9% of
the Fresenius AG Ordinary Shares and 11.25% of the Fresenius AG Preference
Shares, and that H.O.F. -- Beteiligungs-GmbH ("HOF") owns 22.4% of the
Fresenius AG Ordinary Shares. According to published reports, HOF is
50%-owned by Dresdner Bank AG and 50%-owned by the Foundation. Pursuant to a
pooling agreement relating to the shares held by AW and HOF, the Foundation
has voting power over the shares held by AW and HOF. Accordingly, through
(i) their dispositive power over the shares of Fresenius AG held by the
Foundation and (ii) their power to direct the vote of the shares held by the
Foundation (including the shares subject to the pooling agreement), Mr.
Kroner, Dr. Stiefenhofer and Dr. Schneider may be deemed to beneficially own
(under the rules of the Commission, as distinguished from the German concept
of beneficial ownership), 87.36% of the voting shares of Fresenius AG. To
the best of the knowledge of Fresenius Medical Care AG, as of December 31,
997, members of the Fresenius AG Management Board, as a group, did not hold
any Fresenius AG Ordinary Shares or Fresenius AG Preference Shares, other
than the shares beneficially owned by Mr. Kroner, Dr. Stiefenhofer and Dr.
Schneider.
(2) This entity is not affiliated with the Company.
(3) W.R. Grace & Co. -- Conn. assumed sponsorship of the W.R. Grace & Co.
Retirement Plan for Salaried Employees in connection with the Merger.
(4) Less than 1%.
(T) Shares owned by trust and other entities as to which the person has the
power to direct voting and/or investment.
(S) Shares as to which the person shares voting and/or investment power with
others.
OWNERSHIP AND TRANSACTIONS REPORTS
Under Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company's directors, certain of its officers, and
beneficial owners of more than 10% of the outstanding shares of a class of the
Company's equity securities registered under the Exchange Act are required to
file reports with the SEC concerning their ownership of and transactions in the
shares of such class; such persons are also required to furnish the Company with
copies of such reports. Based solely upon the reports and related information
furnished to the Company, the Company believes that all such filing requirements
were complied with in a timely manner during and with respect to 1997.
12
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As described above, Fresenius Medical Care acquired all of the Common Stock
of the Company in connection with the closing of the Merger on September 30,
1996. Accordingly, the Company has entered into certain relationships and
related transactions with Fresenius Medical Care and Fresenius AG.
INVESTMENTS BY FRESENIUS MEDICAL CARE
Fresenius Medical Care is the beneficial owner of all 90,000,000
outstanding shares of the Company's Common Stock. Fresenius Medical Care owns no
shares of the Company's Preferred Stock.
The practical effect of its ownership of all outstanding shares of the
Company's Common Stock is to give Fresenius Medical Care an absolute majority of
the voting power attributable to the Company's voting securities with respect to
all matters in which the classes vote together. Accordingly, Fresenius Medical
Care possesses the ability, through its voting power and its power to elect a
majority of the Company's directors, to approve any actions requiring the vote
of the Company's shareholders, other than matters which materially affect the
rights of the holders of a particular class.
GUARANTEES OF THE COMPANY
The Company has executed a Subsidiary Guarantee in connection with a Senior
Subordinated Indenture dated as of November 27, 1996 (the "Indenture"), under
which Fresenius Medical Care was the Issuer. The Indenture was executed in
connection with the offering of 9% Trust Preferred Securities of Fresenius
Medical Care Capital Trust, a statutory business trust formed under the laws of
the State of Delaware. The proceeds of the offering of the 9% Trust Preferred
Securities were used to purchase 9% Subordinated Notes of Fresenius Medical
Care, and thereafter to repay indebtedness under a credit facility entered into
by NMC and a syndicate of banks in connection with the Merger (the "Credit
Agreement")
The Company has also executed a Subsidiary Guarantee in connection Senior
Subordinated Indentures dated as of February 13, 1998 (together, the "1998
Indentures") under which Fresenius Medical Care was the issuer. The 1998
Indentures were executed in connection with the offering of (a) 7 7/8% USD Trust
Preferred Securities of Fresenius Medical Care Capital Trust II and (b) 7 3/8%
DM Trust Preferred Securities of Fresenius Medical Care Capital Trust III
statutory business trusts formed under the laws of the State of Delaware. The
proceeds of the offering of the 7 7/8% and 7 3/8% Trust Preferred Securities
were used to purchase, respectively, 7 7/8% and 7 3/8% Subordinated Notes of
Fresenius Medical Care and thereafter to repay certain outstanding indebtedness
including an approximately $250 million permanent reduction of the credit
facility under the Credit Agreement and for general corporate purposes
MATERIAL CONTRACTS BETWEEN FRESENIUS AG AND FRESENIUS USA AND
BETWEEN FRESENIUS MEDICAL CARE AND FRESENIUS USA
Prior to the Merger, Fresenius AG and Fresenius USA were parties to
numerous contracts and transactions with each other, both in the ordinary course
of business and otherwise. Fresenius Medical Care acquired all of Fresenius AG's
rights under such contracts and transactions. The following summarizes such
contracts and transactions during year ended December 31, 1997.
Products. During 1997, Fresenius USA purchased $53.2 million of
hemodialysis equipment and supplies from Fresenius Medical Care. Such products
were initially purchased pursuant to a distribution agreement entered into in
1991 and under which Fresenius USA acted as sole North American distributor for
Fresenius AG products for treatment of ESRD by hemodialysis. Prices charged
under that agreement were negotiated each year by the parties based on Fresenius
AG's estimated costs and desired profit margins, taking into account the
competitive environment in the U.S. market, and did not exceed the average of
the prices charged to Fresenius AG's other affiliated distributors. By its
terms, this distribution agreement terminates on the earlier of December 31,
2011 or the date Fresenius AG loses the power to elect 51% of the Fresenius USA
Board. Fresenius AG assigned this distribution agreement to Fresenius Medical
Care in connection with the Merger. In 1994, Fresenius USA and Fresenius AG
entered into a distribution agreement for certain of Fresenius AG's intensive
care and diagnostic products, including the Fresenius AS 104 Cell Separator.
13
<PAGE> 17
Fresenius USA plans to transfer this business to Fresenius AG. Also during 1997,
1996 and 1995, Fresenius USA sold products to Fresenius AG and certain of its
subsidiaries having aggregate sales prices of approximately $2.9 million, $1.3
million, and $2.5 million respectively.
RELATIONSHIPS AND TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
The following are descriptions of certain relationships and transactions
between the Company and its directors and executive officers (or members of
their families) and/or businesses with which they are affiliated. See "Executive
Compensation -- Directors' Compensation and Consulting Arrangements" for a
discussion of certain other relationships and related transactions.
Securities Repurchases. In September 1996, Mr. Lipps sold options to
purchase 450,000 shares of Fresenius USA Common Stock to Fresenius USA at a
price of $5.25 per option ($2,362,500 in the aggregate). Such 450,000 options,
together with options exercised prior to his sale of the underlying shares to
Fresenius USA, represented all of the options to purchase Fresenius USA Common
Stock held by him.
Loans to Officers. In connection with Mr. Schneider's' hiring as Chief
Financial Officer of the Company, NMC has provided Mr. Schneider with a bridge
loan in the original amount of $450,000 to purchase his personal residence in
Massachusetts. The note is payable on demand within thirty days of the sale of
Mr. Schneider's former personal residence. The loan has no stated interest rate.
Mr. Schneider paid approximately $287,000 of the outstanding principal amount of
this loan on April 20, 1998.
Loans to Officers under Stock Incentive Plans. To comply with German
corporate law requirements, award grants under the 1996 FMC Plan and the 1998
FMC Plan are in the form of non-assignable and non-transferable convertible
bonds ("Bonds") and a corresponding nonrecourse employee loan from Fresenius
Medical Care ("Employee Loans") secured solely by the Bonds with respect to
which it was made. The Bonds have a (Deutschemark (DM) denominated) face amount
equal to the aggregate nominal (par) value of the Fresenius Medical Care
Preference Shares into which the Bonds are convertible (in the form of
Preference Shares under the 1998 FMC Plan or ADSs under the 1996 FMC Plan) and
bear interest at a rate determined by the Fresenius Medical Care Management
Board. The Employee Loans have a DM denominated principal amount equal to the
related Bonds and bear interest at the same rate. On conversion of a Bond, the
employee (if a U.S. citizen or resident) will pay a conversion payment equal to
the fair market value (determined as of the day following the date of grant) of
the underlying ADSs or Preference Shares as the case may be. A portion of the
conversion payment will be used to repay the Employee Loan, and interest on the
Employee Loan will be offset by interest payable on the Bonds. Because the terms
of the Employee Loan and Bond match in all respects, award recipients pay
nothing and receive nothing with respect to the Bonds and the Employee Loans. A
ruling from the Internal Revenue Service will be requested that these
arrangements are the functional equivalent of nonqualified employee stock
options, and Bonds may not be converted until a satisfactory ruling has been
received. In connection with the grant of awards under the 1996 FMC Plan in
December 1997, an Employee Loan was made to Mr. Schneider of DM 208,335.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP have been selected as the Company's independent
public accountants and auditors for 1998. Management of the Company expects that
representatives of KPMG Peat Marwick LLP will be present at the Annual Meeting
and will have an opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
OTHER MATTERS
FORM 10-K
The Company's Annual Report on Form 10-K for the year ended December 31,
1997, filed by the Company with the SEC, is being provided to you with this
Information Statement. ADDITIONAL COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1997, MAY BE OBTAINED WITHOUT
14
<PAGE> 18
CHARGE BY CONTACTING THE SECRETARY OF THE COMPANY, TWO LEDGEMONT CENTER, 95
HAYDEN AVENUE, LEXINGTON, MASSACHUSETTS 02173 (TELEPHONE: (781) 402-9000).
OTHER BUSINESS
The Company does not know of any other business that will be presented for
consideration at the Annual Meeting. However, if any other business should come
before the Annual Meeting, management of the Company will have discretion to act
in accordance with its best judgment.
PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder wishing to submit a proposal for inclusion in the Proxy
Statement for the 1999 Annual Meeting pursuant to the shareholder proposal rules
of the SEC should submit the proposal in writing to William F. Grieco, General
Counsel, Vice President and Secretary, Fresenius Medical Care Holdings, Inc.,
Two Ledgemont Center, 95 Hayden Avenue, Lexington, Massachusetts 02173. The
Company must receive a proposal by March 1, 1999 in order to consider it for
inclusion in the Information Statement with respect to the 1999 annual meeting.
In addition, the Company's By-laws require that shareholders give advance
notice and furnish certain information to the Company in order to bring a matter
of business before an annual meeting or to nominate a person for election as a
director. Any communication relating to those By-law provisions should be
directed to Mr. Grieco at the above address.
15
