Siemens 2007 Annual Report Download - page 92

92 Corporate Governance Report: Compensation Report
Compensation Report
This section outlines the principles used for determining the
compensation of the Managing Board of Siemens AG and sets
out the level and structure of Managing Board remuneration.
In addition, this section describes the policies and levels of
compensation paid to Supervisory Board members.
This section is based on the recommendations and suggestions of the German
Corporate Governance Code and comprises data that, in accordance with the re-
quirements of the German Commercial Code (HGB) and International Financial
Reporting Standards (IFRS), are part of the Notes to Consolidated Financial State-
ments and of Management’s discussion and analysis. It is thus part of the audited
consolidated fi nancial statements.
1. Managing Board remuneration
The Chairman’s Committee of the Supervisory Board is responsible for determining
the remuneration of the members of the Managing Board. The Committee comprises
Dr. Gerhard Cromme (Chairman of the Supervisory Board), and Dr. Josef Ackermann
and Ralf Heckmann (both Deputy Chairmen of the Supervisory Board). The structure
of the Managing Board’s compensation is discussed and reviewed regularly by the
Supervisory Board in full session.
The remuneration of the members of the Managing Board of Siemens is based on
the Company’s size and global presence, its economic and fi nancial position, and the
level and structure of managing board compensation paid by peer companies. In ad-
dition, the compensation refl ects each Managing Board member’s responsibilities
and performance. The level of Board compensation is designed to be competitive in
the market for highly qualifi ed executives and to provide incentives in a high-perfor-
mance culture.
In fi scal year 2007, the Managing Board remuneration had four components: (i) a
fi xed annual salary, (ii) a variable bonus which the Chairman’s Committee may ad-
just upward or downward by up to 20 percent of the amount of target attainment,
(iii) stock-based compensation, and (iv) a pension benefi t contribution. With regard
to fi xed salary and bonus, an annual target compensation is determined, consisting
of 50% fi xed and 50% variable components. The target compensation is reviewed
every two to three years on the basis of an analysis of the compensation paid by peer
companies to their top managers. The last review was conducted as of April 1, 2006.