Siemens 2010 Annual Report Download - page 112

6 To our shareholders 21 Corporate Governance
23 Corporate Governance report
29 Corporate Governance statement pursuant to §a
of the German commercial code (HGB) (part of the
Combined management’s discussion and analysis)
30 Compliance report
34 Compensation report (part of Notes to
Consolidated Financial Statements)

Schneider). The reference period for measuring the target
will be the same as the four-year vesting period for the Stock
Awards. After this vesting period expires, the Supervisory
Board will determine how much better or worse Siemens
stock has performed relative to that of those competitors.
This determination will yield a target attainment of between
% and % (the cap). If the target attainment is above
%, the members of the Managing Board will receive an
additional cash payment based on how far the figure outper-
forms the target. If the target attainment is less than %,
a number of Stock Awards equivalent to the shortfall from
the target will expire without replacement.
Share Ownership Guidelines. The requirements of the Share
Ownership Guidelines will remain basically unchanged. How-
ever, the amount of the obligation will henceforth be deter-
mined on the basis of the average base compensation for the
past four years. Accordingly, changes that have been made to
the base compensation in the meantime will be taken into ac-
count. Moreover, it will be possible to credit non -forfeitable
stock awards (Bonus Awards) toward compliance with the
Share Ownership Guidelines.
Share Matching Plan. Formerly, members of the Managing
Board were able to participate in the Share Matching Plan for
employees and executives. Under the new remuneration sys-
tem, they will no longer be able to do so.
Compensatory payments. Concerning the rules governing
compensatory payments, the severance settlement in the
event of a change of control will now be equivalent to no more
than two years’ compensation uniformly for all Managing
Board members. The calculation of the annual compensation
will include the target amount for the Stock Awards. In addi-
tion, compensation or severance payments will be reduced in
the future by % as a lump-sum allowance for discounted
values and for income earned elsewhere. However, this reduc-
tion will apply only to the portion of the compensatory or
severance payment that was calculated without taking account
of the first six months of the remaining term of the Managing
Board member’s contract.
. SUPERVISORY BOARD REMUNERATION
The remuneration of the members of the Supervisory Board
was determined at the Annual Shareholders‘ Meeting through
shareholder approval of a proposal by the Managing and Su-
pervisory Boards. Details of the remuneration are set forth in
the Articles of Association of Siemens AG. The remuneration of
the members of the Supervisory Board is commensurate with
compensation paid by companies of comparable size and re-
flects the responsibilities and scope of work of the Supervisory
Board members as well as the Company‘s economic situation
and performance. The Chairman and deputy chairmen of the
Supervisory Board, as well as the Chairmen and members of
the Audit Committee and the Chairman‘s Committee, and – to
a lesser extent – the Compliance Committee and the Finance
and Investment Committee, receive additional compensation.
The current remuneration policies for the Supervisory Board
were authorized at the Annual Shareholders‘ Meeting of Janu-
ary , . Details are set out in § of the Articles of Asso-
ciation of Siemens AG. As a result, the remuneration of Super-
visory Board members for fiscal  includes three compo-
nents:
> a fixed compensation component,
>
a short-term compensation component based on earnings
per share, and
>
a long-term compensation component based on earnings
per share.
Under this concept, each Supervisory Board member receives
fixed compensation of €, annually as well as short-term
variable compensation of € for each €. by which earn-
ings per share as disclosed in the Consolidated Financial State-
ments exceed a minimum amount of €.; this minimum
amount is increased annually by  %, beginning with the fiscal
year starting on October , . In addition, variable long-
term compensation of € is paid for each €. by which the
average earnings per share over the last three completed fiscal
years as disclosed in the Consolidated Financial Statements
exceed the amount of €.; this minimum amount is in-
creased annually by  %, beginning with the fiscal year start-
ing on October , . The determination of the Supervisory
Board’s remuneration is based on basic earnings per share
(basic EPS) from continuing operations as disclosed in the
Consolidated Financial Statements prepared in accordance
with the accounting principles to be applied in each case.