Siemens 2009 Annual Report Download - page 117

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 Managing Board statements, Independent auditors’ report, Additional information
agement for  shall be considered in the Supervisory
Board’s decision on the discretionary adjustment of the pay-
out amounts. The target parameters were predetermined in
November  by the Chairman’s Committee of the Super-
visory Board. The assessment of target attainment was made
by the Supervisory Board in November  in accordance
with the new legal requirements.
◾Since fiscal year , the long-term stock-based compensa-
tion component has consisted of Siemens Stock Awards. The
applicable general conditions are basically the same for
Managing Board members and senior executives. The
Siemens Stock Awards granted for fiscal year  will be
settled after a waiting period. The waiting period ends in the
third year following the stock award commitment upon the
close of the second day after publication of the results of
operation in the third calendar year after the date of the
commitment. In the event that extraordinary or unforeseen
circumstances arise (e.g. presence of a hostile takeover bid),
the Supervisory Board may restrict the stock-based compen-
sation components already granted.
◾Since fiscal year , members of the Managing Board may
participate in the Siemens Defined Contribution Benefit Plan
(BSAV), the general conditions of which are uniformly appli-
cable to all employees of Siemens AG in Germany. The for-
mer retirement benefit system was integrated into the BSAV
in October . Under the BSAV, members of the Managing
Board receive contributions that are credited to their per-
sonal pension account and will be paid out when the pen-
sion event occurs. The amount of the annual contributions is
based on a predetermined percentage of the base salary and
the target bonus. This percentage was set at  percent upon
introduction of the system in October , after consulta-
tion with an external remuneration expert, and has not been
adjusted since. A portion of these contributions is used for
funding pension commitments earned prior to transfer to
the BSAV. Furthermore, special contributions may be
granted on the basis of individual decisions. In the past, the
level of the contributions was determined by the Chairman’s
Committee of the Supervisory Board, while the decision for
the fiscal year  was made by the Supervisory Board.
Supervisory Board will carefully monitor the further develop-
ment of the Managing Board compensation system at Siemens
in fiscal year .
In fiscal year , the Managing Board remuneration had four
components: (i) a fixed annual salary (base salary), (ii) a vari-
able bonus whose amount depends on the achievement of
predetermined targets, (iii) a stock-based compensation, and
(iv) a pension benefit contribution:
◾The fixed compensation component is paid as a monthly sal-
ary (base salary). The last increase in the Managing Board’s
base salary occured as of April , . Upon their appoint-
ment, the base salary of current members of the Managing
Board was fixed at the pre-April  level and has not been
increased since. The base salary of President and CEO Peter
Löscher was determined upon his appointment on July ,
, after consultation with an external remuneration ex-
pert and has also not been increased since.
◾The variable compensation component (bonus), whose tar-
get amount corresponds to approximately  percent of the
base salary, is accounted for on an annual basis. The bonus is
curbed by a payout cap, i.e. the payout can vary between
zero and  percent. In addition, the payout amount of the
bonus that is based on the level of target attainment may be
adjusted upward or downward by up to  percent at the
discretion of the Super visory Board (discretionary adjust-
ment). As a matter of principle, unique targets are defined
for the members of the Managing Board. The target parame-
ters are the same as for senior executives. Our corporate
program from which the indicators ROCE, Free cash flow and
Revenue growth were selected as appropriate parameters for
Managing Board compensation serves as the basis for this.
At the same time, these indicators, which are important op-
erational performance measures used by the Company, are
employed to set the targets for senior management. The val-
ues for ROCE, Free cash flow and Revenue growth are also
published as part of the Company’s external financial report-
ing process. As in the previous year, it was determined ex
ante that target achievement in relation to the targets of rel-
evance to the Compliance Program defined for senior man-