Siemens 2009 Annual Report Download - page 109

 Managing Board statements, Independent auditors’ report, Additional information 
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 respon-
sibilities of each of the two boards are clearly defined by law.
The composition of the Supervisory Board is determined in
accordance with the German Codetermination Act, which re-
quires 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
affirmatively determine the independence of the individual
directors with reference to specific tests of independence,
German law does not require the Supervisory Board to make
such affirmative findings on an individual basis. German law
only requires that the Audit Committee must include at least
one independent member of the Supervisory Board who has
knowledge and experience in the application of accounting
principles or the auditing of financial statements.
At the same time, the Bylaws for Siemens’ Supervisory Board
contain several provisions to help ensure the independence of
the Supervisory Board’s advice and supervision. Furthermore,
the members of the Supervisory and Managing Boards are
strictly independent of one another; a member of one board is
legally prohibited from being concurrently active on the other.
Supervisory Board members have independent decision-mak-
ing authority and are legally prohibited from following the di-
rection or instruction of any affiliated party. Moreover, Super-
visory Board members may not enter into advisory, service or
certain other contracts with Siemens, unless approved by the
Supervisory Board.
Significant 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 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 notification obligations. In addition,
the NYSE Standards require that foreign private issuers dis-
close any significant ways in which their corporate governance
practices differ from those required of U.S. domestic compa-
nies under the NYSE Standards.
As a company incorporated in Germany, Siemens AG has to
primarily comply with the German Stock Corporation Act and
the German Codetermination Act and follows the recommen-
dations of the German Corporate Governance Code. Further-
more, 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 significant differences between our governance practices
and those of U.S. domestic NYSE issuers are as follows: