Siemens 2007 Annual Report Download - page 81

Corporate Governance Report 81
provisions, offi cial regulations and internal Company policies (compliance). In addi-
tion, the Supervisory Board appoints the members of the Managing Board and allo-
cates members’ individual duties. Important Managing Board decisions – such as
major acquisitions, divestments and fi nancial measures – require Supervisory Board
approval. In the Bylaws for the Managing Board, the Supervisory Board has estab-
lished rules that govern the work of the Managing Board, in particular the allocation
of duties among individual Managing Board members, matters reserved for the
Managing Board as a whole, and the required majority for Managing Board resolu-
tions.
The Supervisory Board’s Bylaws provide for the establishment of committees – cur-
rently six – whose duties, responsibilities and procedures fulfi ll the requirements of
the Code, refl ect applicable SOA requirements and incorporate applicable NYSE
rules, as well as certain NYSE rules not mandatorily applicable to Siemens AG. Each
committee’s chairman provides the Supervisory Board with regular reports regard-
ing the activities of the relevant committee.
The Chairman’s Committee performs the collective tasks of a nominating, compen-
sation and corporate governance committee to the extent that the tasks are not per-
formed by the Nominating Committee (see below). In particular, it makes proposals
regarding the appointment of Managing Board members and establishes guidelines
for the conditions of employment and for the structure and level of the remunera-
tion of Managing Board members.
The Audit Committee consists of three shareholder representatives and two employ-
ee representatives. The Supervisory Board monitors the independence of the mem-
bers of the committee and sees to it that they have special knowledge and experience
in the application of accounting principles and internal control processes. Siemens
relies on the exemption afforded by Rule 10A-3(b)(1)(iv)(C) under the Securities
Exchange Act. We believe that such reliance does not materially adversely affect the
ability of the Audit Committee to act independently or to satisfy the other require-
ments of Rule 10A-3.
The Audit Committee oversees the appropriateness and the effectiveness of the
Company’s external and internal accounting processes. Together with the indepen-
dent auditors, it also reviews the Company’s fi nancial statements prepared quarter-
ly, half-yearly and annually by management. On the basis of the independent audi-
tors’ report on the annual fi nancial statements, the Audit Committee makes a
recommendation to the Supervisory Board whether or not it should approve those
fi nancial statements. In addition, the Audit Committee oversees the Company’s in-
ternal control system related to fi nancial reporting and its procedures for assessing,
monitoring and managing risk. The Company’s Financial Audit department reports
regularly to the Audit Committee. In addition, the Audit Committee monitors the in-
dependence, qualifi cations, rotation and performance of the independent auditors
and performs the other functions required of it under the SOA.