Siemens 2008 Annual Report Download - page 121

Corporate Governance Report 25
Signicant differences between Siemens’ corporate governance and NYSE Corporate Governance
Standards
Companies listed on the NYSE are subject to the Corporate Governance Standards of Section 303A (NYSE Stand-
ards) 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 mem-
bers who are “independent” under the SOA) and to certain NYSE notication obligations. In addition, the NYSE
Standards require that foreign private issuers disclose any signi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 primarily comply with the German Stock Corpora-
tion Act and the German Codetermination Act and follows the recommendations of the German Corporate Gov-
ernance Code. Furthermore, Siemens complies with applicable 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 signi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 responsibilities of each of the two boards are clearly de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 afrmatively determine the independence of the
individual directors with reference to specic tests of independence, German law does not require the Super-
visory Board to make such afrmative ndings on an individual basis.
At the same time, the Bylaws for Siemens’ Supervisory Board contain several provisions to help ensure the inde-
pendence of the Supervisory Board’s advice and supervision. Furthermore, the members of the Supervisory and
Managing Boards are strictly independent from one another; a member of one board is legally prohibited from
being concurrently active on the other. Supervisory Board members have independent decision-making author-
ity and are legally prohibited from following the direction or instruction of any afliated party. Moreover, Super-
visory Board members may not enter into advisory, service or certain other contracts with Siemens, unless
approved by the Supervisory Board.