Siemens 2006 Annual Report Download - page 91

Compensation Report 87
The remuneration of the Managing Board members is composed as follows:
■The fixed compensation is paid as a monthly salary.
■The variable bonus is based on the level of the Company’s attainment of certain EVA
targets and other financial goals, if any, that are set at the start of the fiscal year by the
Chairman’s Committee of the Supervisory Board (for details on EVA as a performance
measure, see Management’s discussion and analysis, on pages 116 ff.). One half of the
bonus is paid as an annual bonus and is contingent upon achieving the Company-wide
EVA target established for the fiscal year. The other half is granted as a long-term bonus
(LT bonus), the amount of which depends on the average attainment of EVA targets over
a three-year period. In any year, the annual bonus and the LT bonus may not exceed
250 percent of the base amount applicable to the variable compensation component. In
addition to the EVA-oriented targets in fiscal 2006 a target relating to net cash from operat-
ing and investing activities was established. For fiscal year 2005 for the last time, one half
of the LT bonus was paid in the form of a commitment to issue or transfer shares of
Siemens AG (stock awards), while the other half was paid in cash. Beginning with the fiscal
year 2006, the LT bonus is paid entirely in cash.
The same principles for determining the bonus apply to Managing Board members who
are not members of the Corporate Executive Committee. Their targets, however, may addi-
tionally depend on the financial performance of the corporate units they lead. The LT bonus
was already paid out fully in cash in fiscal 2005.
■The stock-based compensation consists of stock options issued under the terms of the 2001
Siemens Stock Option Plan as authorized by shareholders at the Annual Shareholders’
Meeting of Siemens AG on February 22, 2001 (for details on the Siemens Stock Option
Plans, see the Notes to Consolidated Financial Statements, pages 211 ff.) and a commitment
to issue or transfer shares of Siemens AG (stock awards). The Chairman’s Committee of the
Supervisory Board may restrict or cap the exercise of stock options in the event of extra-
ordinary, unforeseen changes in the market price of the Siemens stock. The Chairman’s
Committee of the Supervisory Board has decided that only stock awards will be granted for
fiscal year 2006 and with effect from fiscal year 2007 onwards.
■Under the Siemens Defined Contribution Benefit Plan (BSAV), members of the Managing
Board receive contributions, the individual amounts of which are determined annually
on the basis of a percentage of their respective target annual compensation established
by the Chairman’s Committee of the Supervisory Board. A portion of these contributions
is accounted for by funding of pension commitments earned prior to transfer to the BSAV.
In addition, special contributions may be granted on the basis of individual decisions.