Siemens 2010 Annual Report Download - page 111

147 Consolidated Financial Statements 49 Combined management’s discussion and analysis 261 Additional information

The Supervisory Board also decided to lower the maximum
amount for the bonus (cap) from % to %.
Long-term stock-based compensation. Long-term stock-
based compensation will continue to be granted in the form of
forfeitable Stock Awards. To further strengthen the focus on
sustainability also for this compensation component, the
Supervisory Board has extended the vesting period by one year
from three years to four years.
The annual target amounts for Stock Awards (€. million for
the President and CEO, €. million for the other Managing
Board members) will remain unchanged. However, the Super-
visory Board has defined mandatory rules for the grant of Stock
Awards so that this remuneration component is also fully
performance-related. The starting point is the Company-wide
target system One Siemens which has been effective as of fis-
cal year . This system focuses on sustainably enhancing
Siemens’ value. The rules governing the grant of Stock Awards
take this aspect into account as follows:
> On the one hand, the annual grant of Stock Awards will de-
pend on the sustainability of superior business performance.
For this purpose, half of the annual target amount for Stock
Awards will be linked to the average of published earnings
per share (basic EPS) for the past three fiscal years. At the
end of the fiscal year, the Supervisory Board will determine
on a figure that represents the year’s target attainment,
which may lie between % and % (cap). This target at-
tainment will then determine the actual fair value of the
award, and the resulting number of Stock Awards.
> On the other hand, the performance of Siemens’ value rela-
tive to its competitors shall have a direct impact on remu-
neration. For this purpose, with respect to the other half of
the annual target amount for Stock Awards, the Supervisory
Board will first grant a number of Stock Awards equivalent to
the fair value of half the target amount on the date of the
award. The Supervisory Board will also decide on a target
system (target value for % and target curve) for the per-
formance of Siemens stock relative to – at present – five
competitors (ABB, General Electric, Philips, Rockwell,
Obligations under Share Ownership Guidelines
1 Percentage of base compensation.
200% 1
300% 1
Managing Board members President and CEO
Significant changes in the remuneration system for the Managing Board
(adjustments starting with fiscal )
Tying long-term stock-based compensation
(Stock Awards) to goals measured on a multi-year
basis, and extending the vesting period for stock-
based compensation from three years to four years.
Strengthening
of long-term compensation components
Strengthening the variable compensation
components by introducing a fluctuation
range of  – % for long-term stock-based
compensation (Stock Awards).
If targets are not met, the bonus and long-term
stock-based compensation may not be paid at all.
Making remuneration
more dependent on results
Paying out % of the bonus in the form of
non-forfeitable commitments for Siemens stock
with a vesting period of four years (Bonus Awards).
Reduction
of cash compensation
With % target attainment, over half of
members’ compensation will be paid after
a vesting period of four years.
The value of this component of compensation
depends on the performance of Siemens stock
during the vesting period.
Rising share
of deferred compensation
The base compensation of members of the
Managing Board (except the President and CEO)
will be revised to €,; the former base
compensation had remained at approximately
the same level as in .
Revision
of base compensation
Members of the Managing Board will no longer be
able to participate in the Share Matching Plan.
Reducing
other components of compensation