Siemens 2006 Annual Report Download - page 92

Compensation Report
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Employment contracts with Managing Board members generally do not include any explicit
severance commitment in the event of an early resignation from office. However, severance
payments may result from individually agreed termination arrangements.
However, members of the Managing Board who were appointed to the Managing Board
before October 1, 2002 have a contractual right to receive transitional payments for twelve
months after leaving the Managing Board. The transitional payments generally amount to the
fixed salary of the year of resignation and the average of variable bonuses paid for the last
three fiscal years before resignation. In single cases, the transitional payments equal a one-
year target compensation.
In the event of a change of control – i.e. if one or several shareholders acting jointly or in
concert acquire a majority of the voting rights in Siemens AG and exercise a controlling influ-
ence, or if Siemens AG becomes a dependent enterprise as a result of entering into an enter-
prise contract within the meaning of § 291 of the German Stock Corporation Act (AktG), or if
Siemens AG is to be merged into an existing corporation or other entity – any member of the
Managing Board has the right to terminate the contract of employment if such change of con-
trol results in a substantial change in position (e.g. due to a change in corporate strategy or a
change in the Managing Board member’s duties and responsibilities). If this right of termina-
tion is exercised, the Managing Board member will receive a severance payment which
amounts to the target annual compensation applicable at the time of contract termination for
the remaining contractual term of office, but at least for a period of three years. In addition,
non-monetary benefits are settled by a cash payment equal to five percent of the severance
payment. No severance payments are made if the Managing Board member receives benefits
from third parties in connection with a change of control. A right of termination does not exist
if the change of control occurs within a period of twelve (12) months prior to a Managing
Board member’s retirement.
On November 7, 2006, the Chairman’s Committee of the Supervisory Board determined the
bonus amounts and the number of stock awards to be granted, after assessing the attainment
of the targets set at the start of the fiscal year.
For the fiscal year 2006, the aggregate cash compensation amounted to €27.8 million
(2005: €20.9 million) and total remuneration amounted to €30.4 million (2005: €28.0 million),
representing an increase in total remuneration of 8.5 percent.
In the process, both the variable cash bonus and the stock-based compensation were
reduced by the amount of increase related to the target compensation for one year and the pro-
posed amount of increase for fiscal year 2006, respectively. The resulting total of €4.52 million
was transferred to the hardship fund to provide financial support for employees of BenQ
Mobile in Germany.