Siemens 2007 Annual Report Download - page 85

Corporate Governance Report 85
For details of the compensation of our members of the Managing Board and the
Supervisory Board please refer to the Compensation Report.
Signifi cant differences between Siemens’ corporate governance and NYSE Cor-
porate Governance Standards
Companies listed on the NYSE are subject to the Corporate Governance Standards of
Section 303A (the NYSE Standards) of the NYSE Listed Company Manual. Under the
NYSE Standards, Siemens AG, as a foreign private issuer, is permitted to follow its
home-country corporate governance practices in lieu of the NYSE Standards, except
that it is required to comply with the NYSE Standards relating to the having of an
audit committee (comprised of members who are “independent” under the SOA)
and to certain NYSE notifi cation obligations. In addition, the NYSE Standards require
that foreign private issuers disclose any signifi cant ways in which their corporate
governance practices differ from those required of U.S. domestic companies under
the NYSE Standards.
As a company incorporated in Germany, Siemens AG has to comply with the German
law applicable to stock corporations (primarily the German Stock Corporation Act)
and the German Codetermination Act and follows the recommendations of the
German Corporate Governance Code. Furthermore, Siemens complies with appli-
cable rules and regulations of the markets on which its securities are listed, such as
the NYSE, and also voluntarily complies with many of the NYSE requirements that
by their terms apply only to U.S. domestic issuers.
The signifi cant differences between our governance practices and those of U.S.
domestic NYSE issuers are as follows:
Two-tier board
The German Stock Corporation Act requires Siemens AG to have a two-tier board
structure consisting of a Managing Board and a Supervisory Board. The two-tier
system provides a strict separation of management and supervision. Roles and re-
sponsibilities of each of the two boards are clearly defi ned by law. The composition
of the Supervisory Board is determined in accordance with the Codetermination Act,
which requires that one-half of the required 20 Supervisory Board members must
be elected by our domestic employees. In the event of a tie vote at the Supervisory
Board, the Chairman of the Supervisory Board is entitled to cast a deciding vote.
Independence
In contrast to the NYSE Standards, which require the board to affi rmatively deter-
mine the independence of the individual directors with reference to specifi c tests
of independence, German law does not require the Supervisory Board to make
such affi rmative fi ndings on an individual basis. At the same time, the Bylaws for
Siemens’ Supervisory Board contain several provisions to help ensure the indepen-
dence of the Supervisory Board’s advice and supervision. Furthermore, the mem-
bers of the Supervisory and Managing Boards are strictly independent from one an-
other; a member of one board is legally prohibited from being concurrently