Siemens 2005 Annual Report Download - page 72

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Corporate Governance Report
In keeping with its traditions, Siemens continues to place a high priority on corporate governance.
Siemens fully complies with the recommendations of the German Corporate Governance Code
(Codex), which was first issued in 2002 and later expanded in May 2003 and in June 2005. Our
prior exception is no longer applicable, since our Managing Board and Supervisory Board have
implemented a deductible in our directors and officers (D&O) liability insurance for Managing
and Supervisory Board members by way of a contractual commitment with their respective
members.
At their meetings on November 8 and 9, 2005, the Managing Board and the Supervisory Board
of Siemens AG, respectively, discussed compliance with the recommendations of the Codex, in
particular with regard to the amendments of June 2, 2005. Based on these deliberations, the
Boards approved the Declaration of Conformity (with the Codex) which is set forth below (on
page 77 of this Report) and posted on our website and updated as necessary. Siemens voluntarily
complies with all of the Codex’s non-obligatory suggestions, with only minor exceptions.
Our listing on the New York Stock Exchange (NYSE) subjects us to certain U.S. capital market
laws (including the Sarbanes-Oxley Act [SOA]) and regulations of the U.S. Securities and Exchange
Commission (SEC) and rules of the NYSE. To facilitate our compliance with the SOA, we have,
among other things, established a Disclosure Committee (comprised of nine central department
heads) that is responsible for reviewing certain financial and non-financial information before it
is made public and advising the Managing Board in its decisions about disclosure. We have also
introduced procedures that require our Group and subsidiary managements to certify various
matters, providing a basis on which our CEO and CFO certify our financial statements to the SEC.
Consistent with the SOA, Siemens has also implemented procedures for handling accounting
complaints and a Code of Ethics for Financial Matters.
Management and Control Structure – The Supervisory Board
As a German stock corporation, Siemens is subject to German corporate law and has a two-tier
management and oversight structure, consisting of an 11 member Managing Board and a
20 member Supervisory Board. The German Codetermination Act requires that the Company’s
shareholders and its employees each select one-half of the Supervisory Board’s members.
According to the Bylaws of the Supervisory Board, the shareholder representatives must be
independent. Some Supervisory Board members hold, or held in the past year, high-ranking
positions at other companies; nevertheless, our sales and purchases of products and/or services
to or from such companies are transacted on arm’s length bases. We believe that these dealings
do not compromise the independence of the associated Supervisory Board members.
The Supervisory Board oversees and advises the Managing Board in its management of Com-
pany business. At regular intervals, it discusses business development, planning, strategy and
implementation. It also reviews Siemens’ quarterly reports and approves the annual, stand-alone
financial statements of Siemens AG, as well as the Consolidated Financial Statements of Siemens,
taking into account both the audit reports provided by the independent auditors and the results
of the review conducted by the Audit Committee. In addition, the Supervisory Board appoints the
members of the Managing Board and allocates members’ individual duties. Important Managing
Board decisions – such as major acquisitions, divestments and financial measures – require
Supervisory Board approval.
Disclosure Committee
Certification Procedures
www.siemens.com/
corporate_governance
Duties of the
Supervisory Board
Fit4MoreLetter to our Shareholders Managing Board