Siemens 2007 Annual Report Download - page 93

Corporate Governance Report: Compensation Report 93
In fi scal year 2007, the remuneration of the Managing Board members is composed
as follows:
¢ The fi xed compensation is paid as a monthly salary.
¢ The variable bonus is based on the level of the Company’s attainment of certain
Economic Value Added (EVA) and net cash targets as well as other fi nancial goals,
if any, that are set at the start of the fi scal year by the Chairman’s Committee of the
Supervisory Board (for information about EVA as a performance measure, see
p. 138 of this Annual Report). Net cash is the difference between cash infl ows and
cash outfl ows from operating and investing activities. One half of the bonus is paid
as an annual bonus and is contingent upon achieving the Company-wide EVA tar-
gets and net cash targets established for the fi scal year. The other half is granted
as a long-term bonus (LT bonus), the amount of which depends on the average at-
tainment of EVA targets or net cash targets over a three-year period. In fi scal 2007,
the net cash target was given a signifi cantly higher priority and it was included in
the LT bonus for the fi rst time. In any year, the annual bonus and the LT bonus
may not exceed 275 percent of the base amount applicable to the variable compen-
sation component.
¢ As of fi scal year 2006, the stock-based compensation has consisted only of stock
awards.
¢ Under the Siemens Defi ned Contribution Benefi t Plan (BSAV), members of the
Managing Board receive contributions, the individual amounts of which are deter-
mined annually on the basis of a percentage of their respective target annual com-
pensation established by the Chairman’s Committee of the Supervisory Board.
A portion of these contributions is accounted for by funding of pension commit-
ments earned prior to transfer to the BSAV. In addition, special contributions
may be granted on the basis of individual decisions.
Employment contracts with Managing Board members concluded before June 1, 2007
generally do not include any explicit severance commitment in the event of an early
resignation from offi ce. However, severance payments may result from individually
agreed termination arrangements. Managing Board contracts concluded on or after
June 1, 2007 provide for a compensation payment on premature resignation from
offi ce without serious cause, the amount of which must not exceed the value of two
years’ compensation (severance payment cap). In addition, non-monetary benefi ts
are settled by a cash payment equal to fi ve percent of the severance payment.