Siemens 2007 Annual Report Download - page 194

194 Management’s discussion and analysis
Compensation Report
The Compensation Report outlines the principles used for determining the com-
pensation of the Managing Board of Siemens AG and sets out the level and struc-
ture of Managing Board remuneration. In addition, the report describes the poli-
cies and levels of compensation paid to Supervisory Board members and gives
details of stock ownership by members of the Managing and Supervisory Boards.
The Compensation Report is based on the recommendations and suggestions of
the German Corporate Governance Code and comprises data that, in accordance
with the requirements of the HGB, are a part of the MD&A pursuant to § 315 of the
HGB. The Compensation Report is presented within the Corporate Governance
Report, included in this Annual Report for fi scal year 2007.
Outlook
Focus for the Next Three Fiscal Years: Fit42010
Siemens’ focus in the next three years will be fulfi lling our Fit42010 strategic
program. This program includes goals for business growth and development;
income, profi tability and other fi nancial goals; organizational development; and
leadership in corporate responsibility. Fit42010 is a signifi cant advance from
Fit4More, which we successfully concluded in fi scal 2007. We have raised our prof-
itability goals in most of our operating businesses, we added new corporate fi nan-
cial targets, and we are adopting a more focused organizational structure for our
company as a whole. All these developments are discussed in more detail below,
along with our outlook for macroeconomic and industry development.
Macroeconomic Development
Based on estimates of Global Insight, Inc., we anticipate generally positive condi-
tions in the world economy in the next two years. If these conditions continue,
global gross domestic product (GDP) is expected to grow 3.4% in 2008 and at 3.6%
in 2009. We are closely monitoring the possibility that global GDP growth will be
slower than these rates, potentially due to further increases in oil prices and fur-
ther uncertainty in fi nancial markets.
Industry Development
The current global upswing has been fueled by rapid modernization in regions
of the world outside Western Europe, the U.S. and Japan. This modernization has
been broad-based, as emerging economies establish new industrial production
systems, power generation capacity, urban infrastructure, transportation sys-
tems, and healthcare systems. We expect this trend to continue in the relevant
industries in fi scal 2008 and 2009. In the developed economies of Western Europe,
these industries are growing somewhat more slowly and with different priorities.
These include increasing effi ciency and productivity in industrial production;