Siemens 2010 Annual Report Download - page 101

147 Consolidated Financial Statements 49 Combined management’s discussion and analysis 261 Additional information
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target attainment of % would be €. million for the Presi-
dent and CEO, and € million for the other members of the
Managing Board. These values were not to be overrun or un-
der-run by more than % for fiscal  (cap).
With regard to the further terms of the Stock Awards, the same
general principles apply to the Managing Board and senior
executives; these principles are discussed in more detail in
Note  of the “Notes to Consolidated Financial Statements.”
Share Ownership Guidelines. Since , the remuneration
system at Siemens has been significantly shaped by the Com-
pany-wide Siemens Share Ownership Guidelines. These re-
quire the members of the Managing Board to hold Siemens
shares worth a multiple of their base compensation (% for
the President and CEO, % for the other members of the
Managing Board) for the duration of their term of office on the
Managing Board. Evidence that the required amounts of
Siemens shares are held must first be provided in March 
and thereafter be provided annually. A four-year buildup period
applies to members of the Managing Board who were ap-
pointed after October , . If the value of the accrued hold-
ings declines below the amount to be evidenced from time to
time because the market price of Siemens stock decreases, the
member of the Managing Board must acquire additional
shares. At the end of the calendar year, the Company deter-
mines the number of shares required to fulfill the holding ob-
ligation and notifies each member of the Managing Board ac-
cordingly. Thereafter, each member of the Managing Board has
time until the second Friday in March of the following year to
balance any shortages. Accordingly, the Managing Board mem-
bers are required to invest a significant portion of their assets
in Siemens shares during their membership on the Board.
Share Matching Plan. In fiscal , under the Share Matching
Plan, the members of the Managing Board had the option to
invest up to % of the gross amount of their variable cash
compensation component (bonus) in Siemens shares, and like
the other plan participants, at the end of a vesting period of
approximately three years, they will receive one additional free
share of Siemens stock (matching share) for every three shares
they acquired and continuously held.
Pension benefit commitments. Since fiscal , members
of the Managing Board have been included in the Siemens
Defined Contribution Benefit Plan (BSAV), the general condi-
tions of which are uniformly applicable to all employees of
Siemens AG in Germany. The former 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 personal pension account. The amount of the
annual contributions is based on a predetermined percentage
which refers to the base compensation and the target amount
for the bonus. This percentage was set by the Chairman’s Com-
mittee of the Supervisory Board at % when the system was
introduced in October , and has been reconfirmed at that
figure each year since. Furthermore, special contributions may
be granted on the basis of individual decisions of the Supervi-
sory Board. If a member of the Managing Board had earned a
pension benefit entitlement from the Company before the
BSAV was introduced, a portion of his contributions went to-
ward financing this prior commitment.
Compensatory payments. Managing Board contracts entered
into in or after June  provide for a compensatory payment
if membership on the Managing Board is terminated early
without serious cause. The amount of this payment may not
exceed the value of two years‘ compensation (cap). This rule
does not apply if an amicable termination is agreed at the re-
quest of the member of the Managing Board, or if there is seri-
ous cause for the Company to terminate the employment rela-
tionship.
In the event of a change of control – i.e., if one or more share-
holders acting jointly or in concert acquire a majority of the
voting rights in Siemens AG and exercise a controlling influ-
ence, or if Siemens AG becomes a dependent enterprise as a
result of entering into an enterprise contract within the mean-
ing of § of the German Stock Corporation Act (Aktien-
gesetz), or if Siemens AG is to be merged into an existing cor-
poration or other entity – any member of the Managing Board
has the right to terminate his or her contract with the Company
if such a 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 responsi-
bilities). If this right of termination is exercised, the member
of the Managing Board is entitled to a severance payment in
the amount of the base compensation applicable for the last
fiscal year that ended before the termination of the contract,
plus the target bonus for the remainder of the term of the
contract. Managing Board contracts signed before  pro-
vided for a settlement of at least three years’ remuneration for
the remaining term of the contract; Managing Board contracts
signed in or after June  limit this severance entitlement to
not more than three years’ remuneration. In addition, non-
monetary benefits are settled by a cash payment equal to %
of the severance payment. The stock-based components for
which a firm commitment exists will remain unaffected. There