Siemens 2008 Annual Report Download - page 129

Corporate Governance Report: Compensation Report 33
targets over a three-year period. Apart from the ROCE and/or EVA targets and the free cash ow targets, the
compliance targets uniformly applicable to senior management were agreed with the Managing Board in scal
year 2008.
As of scal year 2006, the stock-based compensation has consisted only of stock awards.

Under the Siemens Dened Contribution Benet Plan (BSAV), members of the Managing Board receive contri- 
butions, the individual amounts of which are determined annually on the basis of a percentage of their
respective target annual compensation established by the Chairman’s Committee of the Supervisory Board.
A portion of these contributions is accounted for by funding of pension commitments earned prior to transfer
to the BSAV. In addition, special contributions may be granted on the basis of individual decisions.
On July 29, 2008, the Supervisory Board amended the Managing Board compensation system, effective October
1, 2008, by combining the former variable compensation components, i.e. annual bonus and long-term bonus,
into a single bonus. The target amount of the new bonus corresponds to 100 percent of the xed compensation
(base salary).
As of scal year 2009, members of the Managing Board may participate in the new Share Matching Plan that will
be available to all employees of Siemens worldwide over the medium term. Managing Board members partici-
pating in the Share Matching Plan are entitled to invest up to 50 percent of the annual gross bonus payable to
them in Siemens shares. After expiration of a three-year holding period, each plan participant will receive one
free matching share of Siemens stock for every three Siemens shares acquired and continuously held under the
Plan. Furthermore, the members of the Managing Board are entitled to participate in the Company’s new Base
Share Program replacing the former Employee Share Purchase Program.
Under the uniform Share Ownership Guidelines applicable worldwide within the Company, from 2012 on the
members of the Managing Board are required to hold Siemens shares equal to a multiple of their base salary
(300 percent in the case of the President and CEO, 200 percent in the case of Managing Board members).
Managing Board contracts concluded on or after June 1, 2007 provide for a compensation payment on prema-
ture resignation from ofce without serious cause, the amount of which must not exceed the value of two years’
compensation (severance payment cap).
In the event of a change of control – i.e. if one or several shareholders acting jointly or in concert acquire a
majority of the voting rights in Siemens AG and exercise a controlling inuence, or if Siemens AG becomes a
dependent enterprise as a result of entering into an enterprise contract within the meaning of § 291 of the Ger-
man Stock Corporation Act (AktG), or if Siemens AG is to be merged into an existing corporation or other entity
– any member of the Managing Board has the right to terminate the contract of employment if such change of
control results in a substantial change in position (e.g. due to a change in corporate strategy or a change in the
Managing Board member’s duties and responsibilities). If this right of termination is exercised, the Managing
Board member is entitled to receive a severance payment which amounts to the target annual compensation
applicable at the time of contract termination for the remaining contractual term of ofce, but at least for a
period of three years. In addition, non-monetary benets are settled by a cash payment equal to ve percent of
the severance payment. The stock-based components of compensation for which a rm commitment exists will
remain unaffected. Stock options may, alternatively, also be exercised at the time of employment contract termi-
nation. No severance payments are made if the Managing Board member receives benets from third parties in
connection with a change of control. A right of termination does not exist if the change of control occurs within
a period of twelve (12) months prior to a Managing Board member’s retirement. When signing or extending
existing Managing Board contracts in the future, the Company intends to limit severance payments resulting
from a change of control to the amount recommended by the German Corporate Governance Code.